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Press Release Details

FTAI Reports Record Fourth Quarter and Full Year 2018 Results, Dividend of $0.33 per Common Share

Feb 27, 2019

NEW YORK, Feb. 27, 2019 (GLOBE NEWSWIRE) -- Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI) (the “Company”) today reported financial results for the quarter and full year ended December 31, 2018. The Company’s consolidated comparative financial statements and key performance measures are attached as an exhibit to this press release.

       
Financial Overview      
       
(in thousands, except per share data)      
Selected Financial Results(1) Q4’18   FY18  
Net Cash Provided by Operating Activities $ 47,282       $ 133,697  
Net Income Attributable to Shareholders $ 1,037       $ 5,882  
Basic and Diluted Earnings per Share $ 0.01       $  0.07  
         
Funds Available for Distribution (“FAD”) $ 57,729
      $ 181,665  
Adjusted Net (Loss) Income $ (1,675 )     $ 10,128  
Adjusted Net (Loss) Income per Share $ (0.02 )     $ 0.12  
Adjusted EBITDA $ 63,128       $ 222,237  

(1)  For definitions and reconciliations of Non-GAAP measures, please refer to the exhibit to this press release.

For the fourth quarter of 2018, our total FAD was $57.7 million. This amount includes $82.9 million from equipment leasing activities, offset by $(1.8) million and $(23.4) million from infrastructure and corporate activities, respectively.

Joe Adams, FTAI’s CEO, stated “I am pleased to see infrastructure be a positive contributor to EBITDA for the first time, in Q4.  I am also pleased to see our increasingly differentiated and value added aviation leasing business continue to grow while maintaining our profitability goals.”

Fourth Quarter 2018 Dividend

On February 27, 2019, the Company’s Board of Directors declared a cash dividend on its common shares of $0.33 per share for the quarter ended December 31, 2018, payable on March 27, 2019 to the holders of record on March 15, 2019.

Additional Information

For additional information that management believes to be useful for investors, please refer to the presentation posted on the Investor Relations section of the Company’s website, www.ftandi.com, and the Company’s Annual Report on Form 10-K, when available on the Company’s website. Nothing on the Company’s website is included or incorporated by reference herein.

Conference Call

The Company will host a conference call on Thursday, February 28, 2019 at 8:00 A.M. Eastern Time. The conference call may be accessed by dialing 1-877-447-5636 (from within the U.S.) or 1-615-247-0080 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “FTAI 2018 Fourth Quarter Earnings Call.” A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.ftandi.com.

Following the call, a replay of the conference call will be available after 12:00 P.M. on Thursday, February 28, 2019 through midnight Thursday, March 7, 2019 at 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.), Passcode: 9968637.

About Fortress Transportation and Infrastructure Investors LLC

Fortress Transportation and Infrastructure Investors LLC owns and acquires high quality infrastructure and equipment that is essential for the transportation of goods and people globally. FTAI targets assets that, on a combined basis, generate strong and stable cash flows with the potential for earnings growth and asset appreciation. FTAI is externally managed by an affiliate of Fortress Investment Group LLC, a leading, diversified global investment firm.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond the Company’s control. The Company can give no assurance that its expectations will be attained and such differences may be material. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on the Company’s website (www.ftandi.com). In addition, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. This release shall not constitute an offer to sell or the solicitation of an offer to buy any securities.

For further information, please contact:

Alan Andreini
Investor Relations
Fortress Transportation and Infrastructure Investors LLC
(212) 798-6128
aandreini@fortress.com

Withholding Information for Withholding Agents

This announcement is intended to be a qualified notice as provided in the Internal Revenue Code (the “Code”) and the Regulations thereunder. For U.S. federal income tax purposes, the dividend declared in February 2019 will be treated as a partnership distribution.  For tax withholding purposes, the per share distribution components are as follows:

Distribution Components  
Non-U.S. Long Term Capital Gain $  
U.S. Portfolio Interest Income(1) $ 0.2200  
U.S. Dividend Income(2) $  
Income Not from U.S. Sources(3) $ 0.1100  
Distribution Per Share
$ 0.3300  

(1) Eligible for the U.S. portfolio interest exemption for any holder not considered a 10-percent shareholder under §871(h)(3)(B) of the Code.

(2) This income is subject to withholding under §1441 of the Code.

(3) This income is not subject to withholding under §1441 or §1446 of the Code.

For U.S. shareholders: In computing your U.S. federal taxable income, you should not rely on this qualified notice, but should generally take into account your allocable share of the Company’s taxable income as reported to you on your Schedule K-1.


Exhibit - Financial Statements

 
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollar amounts in thousands, except share and per share data)
 
    Three Months Ended December 31,   Year Ended December 31,
    2018   2017(1)   2018   2017
Revenues                
Equipment leasing revenues   $ 67,035     $ 48,613     $ 253,039     $ 170,000  
Infrastructure revenues   70,865     12,817     126,839     47,659  
Total revenues   137,900     61,430     379,878     217,659  
                 
Expenses                
Operating expenses   70,675     26,360     167,514     92,385  
General and administrative   4,955     3,955     17,126     14,570  
Acquisition and transaction expenses   2,234     2,242     6,968     7,306  
Management fees and incentive allocation to affiliate   3,646     4,203     15,726     15,732  
Depreciation and amortization   39,501     25,728     136,354     88,110  
Interest expense   17,984     17,535     57,854     38,827  
Total expenses   138,995     80,023     401,542     256,930  
                 
Other income (expense)                
Equity in losses of unconsolidated entities   (410 )   (140 )   (1,008 )   (1,601 )
(Loss) gain on sale of assets, net   (1,342 )   11,555     3,911     18,281  
Loss on extinguishment of debt               (2,456 )
Asset impairment                
Interest income   127     106     488     688  
Other income   1,867     893     3,941     3,073  
Total other income   242     12,414     7,332     17,985  
                 
Loss before income taxes   (853 )   (6,179 )   (14,332 )   (21,286 )
(Benefit) provision for income taxes   (208 )   369     1,372     1,954  
Net loss   (645 )   (6,548 )   (15,704 )   (23,240 )
Less:  Net loss attributable to non-controlling interests in consolidated subsidiaries   (1,682 )   (9,558 )   (21,586 )   (23,374 )
Net income attributable to shareholders   $ 1,037     $ 3,010     $ 5,882     $ 134  
                 
Basic and Diluted Earnings per Share:                
Basic   $ 0.01     $ 0.04     $  0.07     $ -  
Diluted   $ 0.01     $ 0.04     $            0.07     $ -  
Weighted Average Shares Outstanding:                
Basic   85,065,125     75,771,738     83,654,068     75,766,811  
Diluted   85,068,966     75,772,867     83,664,833     75,766,811  

(1) Results of operations for the three months ended December 31, 2017 include a $5.9 million out of period adjustment, to interest expense, including non-controlling interest of $2.3 million, which primarily relates to interest previously capitalized that should have been expensed ratably during the first nine months of 2017.  We do not believe this out of period adjustment is material to our financial position or results of operations for any prior periods.

 
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands, except share and per share data)
 
  December 31,
  2018     2017  
Assets      
Cash and cash equivalents $ 99,601     $ 59,400  
Restricted cash 21,236     33,406  
Accounts receivable, net 53,789     31,076  
Leasing equipment, net 1,432,210     1,074,130  
Finance leases, net 18,623     9,244  
Property, plant, and equipment, net 708,853     489,949  
Investments 40,560     42,538  
Intangible assets, net 38,513     40,043  
Goodwill 116,584     116,584  
Other assets 108,809     59,436  
Total assets $ 2,638,778     $ 1,955,806  
       
Liabilities      
Accounts payable and accrued liabilities $ 112,188     $ 68,226  
Debt, net 1,237,347     703,264  
Maintenance deposits 158,163     103,464  
Security deposits 38,539     27,257  
Other liabilities 38,759     18,520  
Total liabilities 1,584,996     920,731  
       
Commitments and contingencies      
       
Equity      
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 84,050,889 and 75,771,738 shares issued
and outstanding as of December 31, 2018 and December 31, 2017, respectively)
840     758  
Additional paid in capital 1,029,376     985,009  
Accumulated deficit (32,817 )   (38,699 )
Accumulated other comprehensive income      
Shareholders' equity 997,399     947,068  
Non-controlling interest in equity of consolidated subsidiaries 56,383     88,007  
Total equity 1,053,782     1,035,075  
Total liabilities and equity $ 2,638,778     $ 1,955,806  
               


 
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands, unless otherwise noted)
 
  Year Ended December 31,
  2018 2017  
Cash flows from operating activities:      
Net loss $ (15,704 )   $ (23,240 )
Adjustments to reconcile net loss to cash provided by operating activities:      
Equity in losses of unconsolidated entities 1,008     1,601  
Gain on sale of assets, net (3,911 )   (18,281 )
Security deposits and maintenance claims included in earnings (6,323 )   (60 )
Loss on extinguishment of debt     2,456  
Equity-based compensation 901     1,343  
Depreciation and amortization 136,354     88,110  
Gain on settlement of liabilities     (1,093 )
Asset impairment      
Change in current and deferred income taxes 649     227  
Change in fair value of non-hedge derivative (5,523 )   (1,022 )
Amortization of lease intangibles and incentives 26,659     8,306  
Amortization of deferred financing costs 5,430     4,202  
Operating distributions from unconsolidated entities      
Bad debt expense 1,771     701  
Other (4 )   732  
Change in:      
 Accounts receivable (23,340 )   (12,001 )
 Other assets (26,212 )   6,475  
 Accounts payable and accrued liabilities 30,471     10,266  
 Management fees payable to affiliate 1,820     899  
 Other liabilities 9,651     (1,124 )
Net cash provided by operating activities 133,697     68,497  
       
Cash flows from investing activities:      
Investment in notes receivable (912 )    
Investment in unconsolidated entities and available for sale securities (1,115 )   (30,309 )
Principal collections on finance leases 1,981     473  
Acquisition of leasing equipment (497,988 )   (425,769 )
Acquisition of property, plant and equipment (229,963 )   (116,031 )
Acquisition of lease intangibles (11,396 )   (10,149 )
Purchase deposit for aircraft and aircraft engines (10,150 )   (12,299 )
Proceeds from sale of finance leases      
Proceeds from sale of leasing equipment 44,062     91,130  
Proceeds from sale of available-for-sale securities     30,238  
Proceeds from sale of property, plant and equipment 23     51  
Proceeds from deposit on sale of leasing equipment 240     400  
Return of deposit on sale of leasing equipment (400 )    
Return of capital distributions from unconsolidated entities 2,085      
Net cash used in investing activities $ (703,533 )   $ (472,265 )
               


 
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands, unless otherwise noted)
 
  Year Ended December 31,
  2018 2017  
Cash flows from financing activities:      
Proceeds from debt $ 750,980     $ 567,191  
Repayment of debt (218,819 )   (125,223 )
Payment of other liabilities to non-controlling interest holder      
Payment of deferred financing costs (3,055 )   (3,377 )
Receipt of security deposits 9,264     7,290  
Return of security deposits (1,775 )   (3,231 )
Receipt of maintenance deposits 53,645     27,049  
Release of maintenance deposits (25,582 )   (6,270 )
Proceeds from issuance of common shares, net of underwriter's discount 148,318      
Common shares issuance costs (820 )    
Capital contributions from non-controlling interests     35  
Capital distributions to non-controlling interests     (254 )
Settlement of equity-based compensation     (74 )
Purchase of non-controlling interest shares (3,705 )    
Cash dividends (110,584 )   (100,058 )
Net cash provided by (used in) financing activities 597,867     363,078  
       
Net increase (decrease) in cash and cash equivalents and restricted cash 28,031     (40,690 )
Cash and cash equivalents and restricted cash, beginning of period 92,806     133,496  
Cash and cash equivalents and restricted cash, end of period $ 120,837     $ 92,806  
       
Supplemental disclosure of cash flow information:      
Cash paid for interest, net of capitalized interest $ 43,636     $ 25,068  
Cash paid for taxes 721     1,726  
       
Supplemental disclosure of non-cash investing and financing activities:      
Proceeds from borrowings of debt 511     108,339  
Repayment and settlement of debt     (102,352 )
Acquisition of leasing equipment (14,263 )   (35,332 )
Acquisition of property, plant and equipment (17,587 )   (37,281 )
Financing of property, plant and equipment      
Settled and assumed security deposits 3,793     3,312  
Billed, assumed and settled maintenance deposits 24,518     37,292  
Deferred financing costs (4,500 )   (8,802 )
Non-cash contribution of non-controlling interest     1,261  
Equity compensation to non-controlling interest 892     1,343  
Change in fair value of cash flow hedge      
Transfer of non-controlling interest 7,225     (2,798 )
Issuance of common shares 301      
           

Key Performance Measures

The Chief Operating Decision Maker (“CODM”) utilizes Adjusted Net Income (Loss) and Adjusted EBITDA as performance measures.

Adjusted Net Income (Loss) is our key performance measure and provides the CODM with the information necessary to assess operational performance, as well as make resource and allocation decisions. Adjusted Net Income (Loss) is defined as net income attributable to shareholders, adjusted (a) to exclude the impact of provision for income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, and equity in earnings of unconsolidated entities, (b) to include the impact of cash income tax payments, and our pro-rata share of the Adjusted Net Income (Loss) from unconsolidated entities, and (c) to exclude the impact of the non-controlling share of Adjusted Net Income (Loss). We evaluate investment performance for each reportable segment primarily based on Adjusted Net Income (Loss). We believe that net income attributable to shareholders, as defined by GAAP, is the most comparable earnings measurement with which to reconcile Adjusted Net Income.

The following table presents our consolidated reconciliation of net income attributable to shareholders to Adjusted Net (Loss) Income for the three months ended and years ended December 31, 2018 and December 31, 2017:

  Three Months Ended
December 31,
  Year Ended
December 31,
(in thousands) 2018   2017   2018   2017
Net income attributable to shareholders $ 1,037     $ 3,010     $ 5,882     $ 134  
Add: (Benefit) provision for income taxes (208 )   369     1,372     1,954  
Add: Equity-based compensation expense 232     648     901     1,343  
Add: Acquisition and transaction expenses 2,234     2,242     6,968     7,306  
Add: Losses on the modification or extinguishment of debt and capital lease obligations             2,456  
Add: Changes in fair value of non-hedge derivative instruments (6,090 )   14     (5,523 )   (1,022 )
Add: Asset impairment charges              
Add: Pro-rata share of Adjusted Net Loss from unconsolidated entities (1) (604 )   (2 )   (1,196 )   (1,601 )
Add: Incentive allocations (146 )   514     407     514  
Less: Cash payments for income taxes 189     (693 )   (721 )   (1,726 )
Less: Equity in losses of unconsolidated entities 410     140     1,008     1,601  
Less: Non-controlling share of Adjusted Net Income (2) 1,271     (55 )   1,030     (558 )
Adjusted Net (Loss) Income $ (1,675)     $ 6,187     $ 10,128     $ 10,401  

(1) Includes the Company’s proportionate share of the unconsolidated entities’ net income adjusted for the excluded and included items detailed in the table above.

(2) Includes the following items for the three months ended December 31, 2018 and 2017: (i) equity-based compensation of $35 and $51 and (ii) (benefit) provision for income tax of $(57) and $4 and (iii) changes in fair value of non-hedge derivative instruments of $(1,248) and $0, less (iv) cash tax payments of $1 and $0, respectively.

Includes the following items for the years ended December 31, 2018 and 2017: (i) equity-based compensation of $131 and $169, (ii) (benefit) provision for income tax of $(47) and $16 and (iii) changes in fair value of non-hedge derivative instruments of $(1,099) and $404, less (iv) cash tax payments of $15 and $31, respectively.

We view Adjusted EBITDA as a secondary measurement to Adjusted Net Income (Loss), which we believe serves as a useful supplement to investors, analysts and management to measure economic performance of deployed revenue generating assets between periods on a consistent basis, and which we believe measures our financial performance and helps identify operational factors that management can impact in the short-term, namely our cost structure and expenses. Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other entities may not calculate Adjusted EBITDA in the same manner.

Adjusted EBITDA is defined as net income attributable to shareholders, adjusted (a) to exclude the impact of provision for income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, and interest expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA for the three months ended and years ended December 31, 2018 and December 31, 2017:

  Three Months Ended December 31,   Year Ended December 31,
(in thousands) 2018   2017   2018   2017
Net income attributable to shareholders $ 1,037     $ 3,010     $ 5,882     $ 134  
Add: (Benefit) provision for income taxes (208 )   369     1,372     1,954  
Add: Equity-based compensation expense 232     648     901     1,343  
Add: Acquisition and transaction expenses 2,234     2,242     6,968     7,306  
Add: Losses on the modification or extinguishment of debt and capital lease obligations             2,456  
Add: Changes in fair value of non-hedge derivative instruments (6,090 )   14     (5,523 )   (1,022 )
Add: Asset impairment charges              
Add: Incentive allocations (146 )   514     407     514  
Add: Depreciation and amortization expense (3) 48,531     28,842     163,013     96,417  
Add: Interest expense 17,984     17,535     57,854     38,827  
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (4) (27 )   (34 )   359     (243 )
Less: Equity in losses of unconsolidated entities 410     140     1,008     1,601  
Less: Non-controlling share of Adjusted EBITDA (5) (829 )   (5,491 )   (10,004 )   (12,763 )
Adjusted EBITDA (non-GAAP) $ 63,128     $ 47,789     $ 222,237     $ 136,524  


(3) 
Includes the following items for the three months ended December 31, 2018 and 2017: (i) depreciation and amortization expense of $39,501 and $25,728, (ii) lease intangible amortization of $2,675 and $1,221 and (iii) amortization for lease incentives $6,355 and $1,893, respectively.

Includes the following items for the years ended December 31, 2018 and 2017: (i) depreciation and amortization expense of $136,354 and $88,110, (ii) lease intangible amortization of $8,588 and $4,716 and (iii) amortization for lease incentives of $18,071 and $3,591, respectively.

(4)  Includes the following items for the three months ended December 31, 2018 and 2017: (i) net loss of $463 and $187, (ii) interest expense of $174 and $135 and (iii) depreciation and amortization expense of $262 and $18, respectively.

Includes the following items for the years ended December 31, 2018 and 2017: (i) net loss of $1,196 and $1,786, (ii) interest expense of $477 and $785, and (iii) depreciation and amortization expense of $1,078 and $758, respectively.

(5)  Includes the following items for the three months ended December 31, 2018 and 2017: (i) equity based compensation of $35 and $51, (ii) (benefit) provision for income taxes of $(57) and $4, (iii) interest expense of $899 and $3,542, (iv) depreciation and amortization expense of $1,200 and $1,894 and (iv) changes in fair value of non-hedge derivative instruments of $(1,248) and $0, respectively.

Includes the following items for the years ended December 31, 2018 and 2017: (i) equity based compensation of $131 and $169, (ii) (benefit) provision for income taxes of $(47) and $16, (iii) interest expense of $4,722 and $5,030, (iv) depreciation and amortization expense of $6,297 and $7,144, and (v) changes in fair value of non-hedge derivative instruments of $(1,099) and $404, respectively.

We use Funds Available for Distribution (“FAD”) in evaluating its ability to meet its stated dividend policy. FAD is not a financial measure in accordance with GAAP. The GAAP measure most directly comparable to FAD is net cash provided by operating activities. We believe FAD is a useful metric for investors and analysts for similar purposes.

We define FAD as: Net Cash Provided by Operating Activities plus principal collections on finance leases, proceeds from sale of assets, and return of capital distributions from unconsolidated entities, less required payments on debt obligations and capital distributions to non-controlling interest, and excluding changes in working capital.

The following table sets forth a reconciliation of Net Cash Provided by Operating Activities to FAD for the years ended December 31, 2018 and 2017:

  Year Ended December 31,
(in thousands) 2018   2017
Net Cash Provided by Operating Activities $ 133,697     $ 68,497  
Add: Principal Collections on Finance Leases 1,981     473  
Add: Proceeds from Sale of Assets 44,085     121,419  
Add: Return of Capital Distributions from Unconsolidated Entities 2,085      
Less: Required Payments on Debt Obligations (1) (7,793 )   (8,368 )
Less: Capital Distributions to Non-Controlling Interest     (254 )
Exclude: Changes in Working Capital 7,610     (4,515 )
Funds Available for Distribution (FAD) $ 181,665     $ 177,252  

(1)  Required payments on debt obligations for the year ended December 31, 2018 exclude $175,000 repayment of the Revolving Credit Facility and $36,026 repayment of the CMQR Credit Agreement, and for the year ended December 31, 2017 exclude $100,000 repayment of the Term Loan, $95,000 repayment of the Revolving Credit Facility and $21,855 repayment of the CMQR Credit Agreement.

The following tables set forth a reconciliation of Net Cash Provided by Operating Activities to FAD for the three months ended and year ended December 31, 2018:

  Three Months Ended December 31, 2018
(in thousands) Equipment Leasing   Infrastructure   Corporate   Total
Funds Available for Distribution (FAD) $ 82,924     $ (1,769 )   $ (23,426 )   $ 57,729  
Less: Principal Collections on Finance Leases             (1,323 )
Less: Proceeds from Sale of Assets             (13,598 )
Less: Return of Capital Distributions from Unconsolidated Entities             (1,213 )
Add: Required Payments on Debt Obligations             1,562  
Add: Capital Distributions to Non-Controlling Interest              
Include: Changes in Working Capital             4,125  
Net Cash Provided by Operating Activities             $ 47,282  


  Year Ended December 31, 2018
(in thousands) Equipment Leasing   Infrastructure   Corporate   Total
Funds Available for Distribution (FAD) $ 289,777     $ (34,177 )   $ (73,935 )   $ 181,665  
Less: Principal Collections on Finance Leases             (1,981 )
Less: Proceeds from Sale of Assets             (44,085 )
Less: Return of Capital Distributions from Unconsolidated Entities             (2,085 )
Add: Required Payments on Debt Obligations             7,793  
Add: Capital Distributions to Non-Controlling Interest              
Include: Changes in Working Capital             (7,610 )
Net Cash Provided by Operating Activities             $ 133,697  

FAD is subject to a number of limitations and assumptions and there can be no assurance that the Company will generate FAD sufficient to meet its intended dividends. FAD has material limitations as a liquidity measure of the Company because such measure excludes items that are required elements of the Company’s net cash provided by operating activities as described below. FAD should not be considered in isolation nor as a substitute for analysis of the Company’s results of operations under GAAP, and it is not the only metric that should be considered in evaluating the Company’s ability to meet its stated dividend policy. Specifically:

FAD does not include equity capital called from the Company’s existing limited partners, proceeds from any debt issuance or future equity offering, historical cash and cash equivalents and expected investments in the Company’s operations.

  • FAD does not give pro forma effect to prior acquisitions, certain of which cannot be quantified.
  • While FAD reflects the cash inflows from sale of certain assets, FAD does not reflect the cash outflows to acquire assets as the Company relies on alternative sources of liquidity to fund such purchases.
  • FAD does not reflect expenditures related to capital expenditures, acquisitions and other investments as the Company has multiple sources of liquidity and intends to fund these expenditures with future incurrences of indebtedness, additional capital contributions and/or future issuances of equity.
  • FAD does not reflect any maintenance capital expenditures necessary to maintain the same level of cash generation from our capital investments.
  • FAD does not reflect changes in working capital balances as management believes that changes in working capital are primarily driven by short term timing differences, which are not meaningful to the Company’s distribution decisions.
  • Management has significant discretion to make distributions, and the Company is not bound by any contractual provision that requires it to use cash for distributions.

If such factors were included in FAD, there can be no assurance that the results would be consistent with the Company’s presentation of FAD.

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Fortress Transportation and Infrastructure Investors LLC